July 25, 2011 / 6:28 PM / 7 years ago

Geithner urges Greek finance minister to continue reform

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner urged Greece’s new finance minister to push forward with efforts to strengthen Greek public finances on Monday as Washington struggled to break a deadlock on its own debt reduction plans.

In their first meeting, Geithner and Greek Finance Minister Evangelos Venizelos discussed the agreement reached by European leaders last week to strengthen Greece’s bailout and restructure its debt, the Treasury said.

In a statement, the Treasury said the two ministers discussed “Greece’s efforts to implement comprehensive reforms and restore growth to its economy. Secretary Geithner welcomed the progress Greece has already made toward strengthening its public finances and underscored the need for continued and full implementation of the program.”

Venizelos, previously Greece’s defense minister, was appointed in a June 17 cabinet reshuffle by Prime Minister George Papandreou as part of a bid to secure parliamentary approval of a new austerity plan that was crucial to freeing up more emergency aid and avoiding a devastating debt default.

The Greek Socialist Party power-broker also met with Charles Dallara, the managing director of the Institute for International Finance, who expressed confidence that the debt-burdened country would be able to return to global capital markets within the next two years if it can successfully swap privately held Greek bonds and fully implement fiscal reforms.

Earlier on Monday, Venizelos met with officials at the International Monetary Fund, one of the key institutions that is providing Greece with funding under the bailout, along with the European Union.

He is also due to meet with new IMF managing director Christine Lagarde and will meet with Democratic senators Tim Johnson, who heads the Senate Banking Committee and John Kerry, who heads the Senate Foreign Relations committee.

At about 6 p.m. (2200 GMT), Venizelos is scheduled to deliver a speech at the Peterson Institute for International Economics, a Washington think-tank.

His visit to Washington comes as the Obama administration and Republicans and Democrats in Congress are deadlocked over the United States’ own debt reduction plans, just over a week before an August 2 deadline to raise the U.S. borrowing limit.

Should the stalemate go down to the wire, the United States could face a downgrade of its prized AAA debt rating, which could trigger global market turmoil.

Bond rating agency Moody’s cut Greece’s credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of the new EU rescue package, becoming the second rating agency to issue such a warning.

(Reporting by David Lawder; Editing by James Dalgleish)

Corrects Johnson committee chairmanship, 7th paragraph.

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